United States
Securities and Exchange Commission
Washington, D.C. 20549
Commission File Number - 0-22273
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BOULDER CAPITAL OPPORTUNITIES III, INC.
(Name of Issuer)
Common
(Title of Class of Securities)
10 1 409100
(Cusip Number)
Robert Soehngen, 2434 Vine Place, Boulder, CO 80304 (303) 442-1021
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 15, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule 13-
d(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the
statement /X/. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in Item 1; and 92) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7)
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SCHEDULE 13D
CUSIP NO.: 10 1 409100 Page 1 of 5 Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Robert Soehngen
SSN: ###-##-####
2. Check the Appropriate Box if A Member of a Group*
a / /
b / /
3. SEC Use Only
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
/ /
6. Citizenship or Place of Organization
Boulder, Colorado
7. Sole Voting Power
447,500
8. Shared Voting Power
0
9. Sole Dispositive Power
447,500
10. Shared Dispositive Power
0
11. Aggregate Amount Beneficially Owned by Each Reporting Person
447,500
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12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares
/ /
13. Percent of Class Represented by Amount in Row (11)
Not Applicable
14. Type of Reporting Person
IN
Item 1. Security & Issuer
This statement relates to common shares of Boulder Capital
Opportunities III, Inc.
Item 2.
a. Robert Soehngen
b. 2434 Vine Street, Boulder, Colorado 80304
c. Robert Soehngen is President and Director of
Boulder Capital Opportunities III, Inc., 2434 Vine
Street, Boulder, Colorado 80304, and is also President
of Century 21 Gold, Inc., a real estate broker located
at 1280 Centaur Village, #10, Lafayette, Colorado.
d. The reporting person has not during the last five
years been convicted in a criminal proceeding
(excluding traffic violations).
e. The reporting person has not during the last five
years been subject to or party to a civil proceeding of
any type nor has any judgment, decree or order of any
type been entered against reporting person.
f. Citizenship: United States
Item 3. Source and Amount of the Funds
The amount of the purchase price was $100,000. The fund
source was from stock subscribed.
Item 4. Purpose of the Transaction
The transaction was made to facilitate the acquisition of
the assets and business of Sonic Jet Performance, LLC, a jet ski
based watercraft manufacturer, and as a requirement of the
purchase of $1,500,000 in Series A Preferred Convertible stock of
Boulder Capital Opportunities III, Inc., which funds provided
operating capital to the newly acquired jet ski business.
100,000 common shares have been sold back to Boulder Capital
Opportunities III, Inc. and the Company has the option to
repurchase an additional 332,500 shares for $46,958.97 by
December 1, 1998. Concurrently, Sonic Jet Performance, LLC
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conveyed all of its assets, liabilities and business to Boulder
Capital Opportunities III, Inc. in consideration of issuance of
5,000,000 shares of common stock to Sonic Jet Performance, LLC.
Alex Mardikian has been appointed as Vice President of
Boulder Capital Opportunities III, Inc. It is anticipated that
Alex Mardikian will be appointed to the Board of Directors of the
Company, Boulder Capital Opportunities III, Inc. upon compliance
with Section 14f of the Securities Exchange Act of 1934. Robert
Soehngen expects to resign as Director and President upon request
of the Board as then duly constituted. No other Board members
have been selected, however at least two other members will be
appointed in the future.
The issuer, Boulder Capital Opportunities III, Inc. has
acquired the assets and liabilities of Sonic Jet Performance, LLC
for 5,000,000 shares of common stock. Concurrently, $1,500,000
was paid for 1,600 shares of newly authorized Series A
Convertible Preferred Stock by a private investment company.
Such shares of Series A Convertible Preferred Stock are
convertible to common at the lower of $4.00 per share or the
average of the five lowest closing prices of common in the 20
trading days prior to the Notice of Conversion by holder.
The assets of Sonic Jet Performance, LLC were $6,190,134 at
December 31, 1997, according to the Audited Balance Sheet of
Wayne Voigt, C.P.A. and the liabilities were $837,677 at December
31, 1997. This balance sheet, as combined with the issuer,
Boulder Capital Opportunities III, Inc. will materially change
the capitalization of Boulder Capital Opportunities III, Inc.
Item 5. Interest in Securities of the Issuer
a. 447,500 common shares (7.4%) of issuer are owned
beneficially and of record by Robert Soehngen, the
Reporting Person. Previously, the Reporting Person had
owned 660,000 shares of common stock. In September
1997, Reporting Person sold 112,500 shares in a private
transaction to Harden International, Inc., leaving the
Reporting Person with 547,500 shares.
b. Robert Soehngen has sole power to vote 447,500
shares of common stock.
c. On June 15, 1998, Reporting Person sold 100,000
shares of common stock to Registrant for $100,000 and
granted an option to issuer to purchase 332,500
additional shares for $46,958.97 by December 1, 1998.
d. Not Applicable
e. Not Applicable
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The Reporting Person, Robert Soehngen has granted an option
to issuer to purchase 332,500 shares of common stock of Boulder
Capital Opportunities III, Inc. for $46,958.97 on or before
December 1, 1998. It has been agreed, as part of the Stock
Purchase Agreement for Series A Preferred Stock by JNC Strategic
Ltd, that the remaining 332,500 shares as well as the 100,000
shares already purchased will be retired into the treasury of the
company.
Exhibit 6.1 Share Exchange Agreement
Exhibit 6.2 Stock Sale Agreement
Exhibit 6.3 Securities Purchase Agreement
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: July 7, 1998 /s/Robert Soehngen
Signature
Robert Soehngen/President
Name/Title
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Exhibit 6.1
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SHARE EXCHANGE AGREEMENT
by and among
BOULDER CAPITAL OPPORTUNITIES III, INC.
a Colorado corporation
and
SONIC JET PERFORMANCE, LLC
a California Limited Liability Company
dated: June 15, 1998
<PAGE>
SHARE EXCHANGE AGREEMENT
BOULDER CAPITAL OPPORTUNITIES III, INC.
and
SONIC JET PERFORMANCE, LLC
This Share Exchange Agreement ("Agreement"), dated as of June 15, 1998,
among BOULDER CAPITAL OPPORTUNITIES III, INC. ("BCOIII"), a Colorado
Corporation, SONIC JET PERFORMANCE, LLC ("SJP") , a California Limited
Liability Company.
W I T N E S S E T H:
A. WHEREAS, BCOIII is a corporation duly organized under the laws of
the State of Colorado, and SJP is a Limited Liability Company organized in
California.
B. Plan of Exchange. It is the intention that the assets of SJP shall
be acquired by BCOIII and all liabilities and other obligations of SJP shall be
assumed in exchange solely for voting stock of BCOIII. For federal income
tax purposes it is intended that this exchange shall be treated under Sec.
351 of the Internal Revenue Code as may be applicable.
C. Exchange of Shares. SJP agrees that all of the assets of SJP shall
be exchanged with BCOIII for 5,000,000 common shares of BCOIII issued to SJP
fully paid and nonassessable, and that BCOIII shall assume all liabilities and
other obligations of SJP.
D. WHEREAS, the parties hereto wish to enter into this Agreement,
pursuant to the provisions of the Colorado Revised Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein on the "Closing Date"
(as herein defined), SJP shall convey all of its assets by assignment or Bill of
Sale and BCOIII shall assume all liabilities of SJP by way of an assumption
agreement as such assets and liabilities are specified in the unaudited balance
sheet of SJP, dated as of May 31, 1998, attached hereto, and made a part hereof
by this reference, for 5,000,000 common shares of BCOIII common stock. The
transactions contemplated by this Agreement shall be completed at a closing
("Closing") on a closing date ("Closing Date") on or before June 5, 1998.
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On the Closing Date, all of the documents to be furnished to BCOIII and
SJP, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. Littman, to be held in escrow until all
closing conditions hereunder have been met or the date of termination of this
Agreement, but no longer than 10 days after closing date, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 Concurrent with the execution hereof, SJP shall deposit or cause to
be deposited to BCOIII $9,000 as a non-refundable consideration for this
agreement which will be used to pay accrued legal fees to Al Brennan and audit
costs for 1997 10-K.
1.3 For accounting purposes, the Agreement shall be effective as of
12:01 a.m., on the last day of the month preceding the Closing Date.
ARTICLE II
Issuance and Exchange of Shares
2.1 The shares of $.0001 par value common stock of BCOIII shall be
issued by it to SJP at closing.
2.2 BCOIII represents that no outstanding options or warrants for its
unissued shares exist, except as may be contained in an Encore Capital
Subscription Agreement now in negotiation.
2.3 No fractional shares of BCOIII stock shall be issued as a result of
the Agreement. Shares shall be rounded to nearest whole share.
ARTICLE III
Representations, Warranties
and Covenants of SONIC JET PERFORMANCE, LLC
No representations or warranties are made by any director, officer,
employee or shareholder of SJP as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "SJP
Disclosure Statement"), if any. SJP hereby represents, warrants and
covenants to BCOIII except as stated in the SJP Disclosure Statement, as
follows:
3.1 SJP is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of California, and has
the power and authority to carry on its business as it is now being
conducted. The Articles of Organization and Operating Agreement of SJP are
complete and accurate, and the minute books of SJP contain a record, which is
complete and accurate in all material respects, of all meetings, and all
actions of the members and managers of SJP.
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3.2 SJP has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.3 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions
contemplated herein by SJP will conflict with or result in a breach or
violation of the Articles of Organization or Operating Agreement of SJP.
3.4 The execution, delivery and performance of this Agreement has been
duly authorized and approved by SJP's sole manager, Albert Mardikian, a
"MAJORITY OF MEMBERS" (as such term is defined in the operating agreement
for SJP).
3.5 Within 5 days SJP will deliver to BCOIII consolidated audited
financial statements of SJP, as of December 31, 1997 and an unaudited
balance sheet of SJP at May 31, 1998. All such statements, herein
sometimes called "SJP Financial Statements", are complete and correct in
all material respects and, together with the notes to these financial
statements, present fairly the financial position and results of operations
of SJP for the periods included. The statements will have been prepared in
accordance with generally accepted accounting principles.
3.6 Since the dates of the SJP Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise of SJP.
3.7 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of SJP, threatened against SJP or
affecting any of its assets or properties, and SJP is not in any material
breach or violation of or default under any contract or instrument to which
SJP is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by SJP under any contract or other instrument to which SJP is a party
or by which it or any of its properties may be bound or affected, or under
its respective Articles of Organization or Operating Agreement, nor is there
any court or regulatory order pending, applicable to SJP.
3.8 All liability of SJP has been properly provided for and is adequate
to comply with all regulatory requirements regarding same.
3.9 The representations and warranties of SJP shall be true and correct
as of the date hereof and as of the Closing Date.
3.10 SJP will deliver to BCOIII a copy of each of the federal income tax
returns of SJP for the year ending December 31, 1997, and for any additional
open years. All returns and information reports required or requested by
federal, state, county, and local tax authorities have been filed or supplied
in a timely fashion, and all such information is true and correct in all
<PAGE>
material respects. Provision has been made for the payment of all taxes due
to date by SJP, including taxes for the current year ending December 31,
1997. No federal income tax return of SJP is currently under audit.
3.11 SJP has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors, other than
as disclosed in the books and records and disclosure statement.
3.12 No representation or warranty by SJP in this Agreement, the SJP
Disclosure Statement or any certificate delivered pursuant hereto contains
any untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
ARTICLE IV
Representations, Warranties and Covenants of BCOII INC.
No representations or warranties are made by any director, officer,
employee or shareholder of BCOIIIas individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
BCOIII hereby represents, warrants and covenants to SJP, except as stated
in the BCOIII Disclosure Statement, as follows:
4.1 BCOIII is a corporation duly organized, validly existing and in good
standing under the lawsof the State of Colorado, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted.The Articles of Incorporation and Bylaws of BCOIII,
copies of which have been delivered to SJP, are complete and accurate, and
the minute books of BCOIII contain a record, which is complete and accurate in
all material respects, of all meetings, and all corporate actions of the
shareholders and Board of Directors of BCOIII.
4.2 The aggregate number of shares which BCOIII is authorized to issue
is 100,000,000 shares of common stock with a par value of $.001 per share, of
which approximately 1,010,000 shares of such common stock will be issued and
outstanding, fully paid and non-assessable, prior to closing under this
agreement. BCOIII has no outstanding options, warrants or other rights to
purchase, or subscribe to, or securities convertible into or exchangeable for
any shares of capital stock.
4.3 BCOIII has complete and unrestricted power to enter into and, upon
the appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
<PAGE>
herein by BCOIII will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of BCOIII.
4.5 The execution of this Agreement has been duly authorized and
approved by the BCOIII's Board of Directors.
4.6 BCOIII has delivered to SJP financial statements of BCOIII dated
December 31, 1997. All such statements, herein sometimes called "BCOIII
Financial Statements" are (and will be) complete and correct in all material
respects and, together with the notes to these financial statements, present
fairly the financial position and results of operations of BCOIII of the
periods indicated. All statements of BCOIII will have been prepared in
accordance with generally accepted accounting principles.
4.7 Since the dates of the BCOIII Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of BCOIII. BCOIII does not have any material liabilities or
obligations, secured or unsecured except as shown on updated financials
(whether accrued, absolute, contingent or otherwise).
4.8 BCOIII has delivered to SJP a list and description of all pending
legal proceedings involving BCOIII, none of which will materially adversely
affect them, and, except for these proceedings, there are no legal proceedings
or regulatory proceedings involving material claims pending, or, to the
knowledge of the officers ofBCOIII, threatened against BCOIII or affecting
any of its assets or properties, and BCOIII is not in any material breach or
violation of or default under any contract or instrument to which BCOIII is a
party, and no event has occurred which with the lapse of time or action by a
third party could result in a material breach or violation of or default by
BCOIII under any contract or other instrument to which BCOIII is a party or
by which they or any of their respective properties may be bound or affected,
or under their respective Articles of Incorporation or Bylaws, nor is there
any court or regulatory order pending, applicable to BCOIII.
4.9 BCOIII shall not enter into or consummate any transactions prior to
the Closing Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into
any agreement or transaction which would adversely affect its financial
condition.
4.10 BCOIII is not a party to any contract performable in the future.
4.11 The representations and warranties of BCOIII shall be true and
correct as of the date hereof and as of the Closing Date.
4.12 BCOIII has delivered to SJP, all of its corporate books and
records for review, true and correct copies of BCOIII's tax return since
<PAGE>
1996, if any. BCOIII will also deliver to SJP on or before the Closing Date
any reports relating to the financial and business condition of BCOIII which
occur after the date of this Agreement and any other reports sent generally
to its shareholders after the date of this Agreement.
4.13 BCOIII has no employee benefit plan in effect at this time.
4.14 No representation or warranty by BCOIII in this Agreement, the
BCOIII Disclosure Statement or any certificate delivered pursuant hereto
contains any untrue statement of a material fact or omits to state any
material fact necessary to make such representation or warranty not misleading.
4.15 BCOIII agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of SJP and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and BCOIII expressly
assumes such indemnification obligations of SJP.
4.16 BCOIII has delivered, to SJP true and correct copies of the BCOIII
10-K and each of its other reports to shareholders and filing with the
Securities and Exchange Commission ("SEC") for the current year. BCOIII will
also deliver to SJP on or before the Closing Date any reports relating to the
financial and business condition of BCOIII which are filed with the SEC after
the date of this Agreement and any other reports sent generally to its
shareholders after the date of this Agreement.
4.17 BCOIII has duly filed all reports required to be filed by it under
the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended,(the "Federal Securities Laws"). No such reports, or
any reports sent to the shareholders of BCOIII generally, contained any
untrue statement of material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements in such
report, in light of the circumstances under which they were made, not
misleading.
4.18 BCOIII hereby covenants that during the contract period, prior to
closing, it will not take any board action without Mardikian's approval in
writing, pending selection of new officers and directors at closing.
ARTICLE V
Obligations of the Parties Pending the Closing Date
5.1 This Agreement shall be duly submitted to the members of SJP for
the purpose of considering and acting upon this Agreement in the manner
required by law at a meeting of members on a date selected by SJP, such date
to be the earliest practicable date or by majority written consent. The
manager of SJP, subject to its fiduciary obligations to members, shall use
its best efforts to obtain the requisite majority approval of SJP members of
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this Agreement and the transactions contemplated herein. SJP and BCOIII
shall take all reasonable and necessary steps and actions to comply with and
to secure SJP member approval of this Agreement.
5.2 At all times prior to the Closing Date during regular business
hours, each party will permit the other to examine its books and records and
the books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement,
each party may provide the other parties with information which is confidential
or proprietary information. During the term of this Agreement, and for four
years following the termination of this Agreement, the recipient of such
information shall protect such information from disclosure to persons, other
than members of its own or affiliated organizations and its professional
advisers, in the same manner as it protects its own confidential or proprietary
information from unauthorized disclosure, and not use such information to the
competitive detriment of the disclosing party. In addition, if this Agreement
is terminated for any reason, each party shall promptly return or cause to be
returned all documents or other written records of such confidential or
proprietary information, together with all copies of such writings and, in
addition, shall either furnish or cause to be furnished, or shall destroy, or
shall maintain with such standard of care as is exercised with respect to its
own confidential or proprietary information, all copies of all documents or
other written records developed or prepared by such party on the basis
of such confidential or proprietary information. No information shall be
considered confidential or proprietary if it is (a) information already in
the possession of the party to whom disclosure is made, (b) information
acquired by the party to whom the disclosure is made from other sources,
or (c) information in the public domain or generally available to interested
persons or which at a later date passes into the public domain or becomes
available to the party to whom disclosure is made without any wrongdoing by
the party to whom the disclosure is made.
5.3 BCOIII and SJP shall promptly provide each other with information
as to any significant developments in the performance of this Agreement, and
shall promptly notify the other if it discovers that any of its
representations, warranties and covenants contained in this Agreement or in
any document delivered in connection with this Agreement was not true and
correct in all material respects or became untrue or incorrect in any material
respect.
5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in
order to consummate the transactions contemplated hereby as promptly as
practicable.
ARTICLE VI
Procedure for Exchange
6.1 At the Closing Date, the exchange shall be effected as set forth
in Colorado Revised Statutes with common stock certificates of BCOIII being
exchanged for SJP assets and the assumption by BCOIII of the liabilities and
other obligations of SJP, all as delineated above, together with delivery of
<PAGE>
Assignments and Bills of Sale for the assets transferred by SJP to BCOIII,
and an Assumption Agreement for the liabilities and other obligations assumed
by BCOIII.
ARTICLE VII
Conditions Precedent to the
Consummation of the Exchange
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
7.1 SJP shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Closing Date and BCOIII and SJP shall provide one another at the Closing
with a certificate to the effect that such party has performed each of the acts
and undertakings required to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted by the manager of SJP in
accordance with the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions
contemplated herein, or which might subject any of the parties hereto or their
directors or officers to any material liability, fine, forfeiture or penalty
on the grounds that the transactions contemplated hereby, the parties hereto
or their directors or officers, have violated any applicable law or regulation
or have otherwise acted improperly in connection with the transactions
contemplated hereby, and the parties hereto have been advised by counsel
that, in the opinion of such counsel, such action, suit or proceeding raises
substantial questions of law or fact which could reasonably be decided
adversely to any party hereto or its directors or officers.
7.4 All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and the
form and substance of all legal proceedings and related matters shall have
been approved by counsel for SJP and BCOIII.
7.5 The representations and warranties made by SJP and BCOIII in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of (1) changes caused by transactions suggested or approved in
writing by SJP or (2) events or changes (which shall not, in the aggregate,
have materially and adversely affected the business, assets, or financial
<PAGE>
condition of BCOIII or SJP during or arising after the date of this Agreement.)
7.6 SJP shall have furnished BCOIII with:
(1) a certified copy of a resolution or resolutions duly adopted by a
"MAJORITY OF MEMBERS", as such term is defined in the operating
agreement for SJP, approving this Agreement and the transactions
contemplated by it;
(2) an opinion of its counsel dated as of the Closing Date in
accordance with 7.5 hereof;
(3) an agreement from each member "affiliate" of SJP as defined in the
rules adopted under the Securities Act of 1933, as amended, to the
effect that (a) the affiliate is familiar with SEC Rules 144
and 145; (b) none of the shares of BCOIII common stock will be
transferred by or through the affiliate in violation of the
Federal Securities Laws; (c) the affiliate will not sell or in any
way reduce his risk relative to any BCOIII common stock received
pursuant to this Agreement until such time as financial results
covering at least 30 days of post-closing date combined operations
shall have been published by BCOIII on SEC Form 10-Q or otherwise; and
(d) the affiliate acknowledges that BCOIII is under no obligation
to register the sale, transfer, or the disposition of BCOIII common
stock by the affiliate or to take any action necessary in order to
make an exemption from registration available to the affiliate, but
understands that BCOIII will satisfy the public information
requirements of Rules 144 and 145 during the three-year period
following the Closing Date.
7.7 BCOIII shall furnish SJP with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of BCOIII, approving this
Agreement and the transactions contemplated by it.
7.8 All outstanding liabilities of BCOIII shall have been paid and
released prior to closing.
7.9 Encore Capital shall have delivered a fully executed Stock
Subscription Agreement between BCOIII and Encore Capital for a $1,500,000
investment in Preferred Convertible Stock.
7.10 BCOIII shall appoint, at closing, Albert Mardikian as President of
BCOIII and, subject to filing a Form 14f with the SEC and mailing to
shareholders required thereby, shall appoint Mardikian as a director and such
other persons as Mardikian may direct.
<PAGE>
ARTICLE VIII
Termination and Abandonment
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the
Closing Date:
(a) By mutual consent of SJP and BCOIII;
(b) By SJP or BCOIII, if any condition set forth in Article VII
relating to the other party has not been met or has not been waived;
(c) By SJP or BCOIII, if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before
any court or governmental agency, in which it is sought to restrain,
prohibit or otherwise affect the consummation of the transactions
contemplated hereby;
(d) By any party, if there is discovered any material error,
misstatement or omission in the representations and warranties of
another party;
(e) By any party if the Agreement Closing Date is not within 30 days
from the date hereof; or
8.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action
taken by its Board of Directors or Manager provided; however, that such
action shall be taken only if, in the judgment of the Board of Directors or
Manager taking the action, such waiver will not have a materially adverse
effect on the benefits intended under this Agreement to the party waiving
such term or condition.
ARTICLE IX
Termination of Representation and
Warranties and Certain Agreements
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the
parties hereto shall survive in accordance with their terms.
<PAGE>
ARTICLE X
Miscellaneous
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties
among the parties other than those set forth herein or those provided for
herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of
the Exchange Agreement and Representations by all shareholders.
10.3 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances
as are deemed necessary, the party requested to do so will use its best
efforts to provide such executed instruments or do all things necessary or
proper to carry out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not
be amended without approval of SJP.
10.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To BCOIII, Inc.:
Robert Soehngen
1280 Centaur Village Drive, #10
Lafayette, CO 80026
copy to: Michael A. Littman
Attorney at Law
10200 W. 44th Ave., #400
#400 Wheat Ridge, CO 80033
<PAGE>
To Sonic Jet Performance, LLC
15662 Commerce Lane
Huntington Beach, CA 92649
copy to: Law Offices of Pasquale P. Caiazza
Attn: Christopher A. Morgan, J.D.
1625 West 22nd Street
Santa Ana, California 92706-2413
or such other addresses as shall be furnished in writing by any party, and
any such notice or communication shall be deemed to have been given as of the
date received.
10.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of SJP and
BCOIII. However, either SJP or BCOIII may issue at any time any press release
or other public statement it believes on the advice of its counsel it is
obligated to issue to avoid liability under the law relating to disclosures,
but the party issuing such press release or public statement shall make a
reasonable effort to give the other party prior notice of and opportunity to
participate in such release or statement.
IN WITNESS WHEREOF, the parties have set their hands and seals this 15th
day of June, 1998.
BOULDER CAPITAL OPPORTUNITIES III, INC.
By:__________________________
President
Attest:________________________
Secretary
SONIC JET PERFORMANCE, LLC
By:___________________________
Manager
<PAGE>
Exhibit 6.2
<PAGE>
STOCK SALE AGREEMENT
This STOCK SALE AGREEMENT (the "Agreement"), dated as of
June 12, 1998, is made by and between Robert Soehngen, ("Seller")
and Boulder Capital Opportunities III, Inc. ("Buyer").
In consideration of One Hundred Thousand dollars and
no/100ths ($100,000.00) paid herewith, Seller hereby sells to
the Buyer, 100,000 shares (the "Shares") of common stock of
Boulder Capital Opportunities III, Inc. free and clear of liens
and encumbrances.
Further, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and for the purpose of defining
the terms and provisions of this Agreement and the Option hereby
granted, Seller and Buyer hereby agree as follows:
1. Terms of Exercise. The Option granted herein may be
exercised by Buyer in whole or in part at any time or times on or
before 5:00 p.m. as set forth in 2 c). Buyer may exercise the
Option from time to time by delivering to escrow agent the
amounts set forth in 2 below net to Seller for each Share (the
"Exercise Price") for which Buyer is exercising the Option.
Payment shall be made to Seller by bank check or wire transfer.
Upon receipt by Escrow Agent of Buyer's payment, Escrow Agent
shall transfer from the number of Shares so purchased upon the
exercise of the Option.
2. Purchase Schedule Conditions.
a) Shares shall be held by Michael A. Littman, Escrow
Agent who may transfer the shares purchased upon concurrent
payment of the purchase price to Escrow Agent.
b) Buyer must purchase the shares within the time
period specified below in order to maintain the option in force
and effect. Failure to exercise the purchase in the given time
period shall cause the option to be null and void.
c) 432,500 of the shares of Boulder Capital
Opportunities III, Inc. @ $.14123 per share on or before
December 1, 1998, by delivery of wired funds or cashier's check
to the Escrow Agent, who is hereby then instructed to deliver the
shares to Buyer or assigns.
3. Representations, Warranties and Covenants of Seller.
Seller hereby represents and warrants as follows:
a) None of the representations or warranties made by
Seller contains any untrue statement of material fact, or omits
to state any material fact necessary to make the statements made,
in the light of the circumstances under which they were made, not
misleading.
b) The shares are unencumbered by any lien or claim.
<PAGE>
4. Unregistered Securities. The Shares have not been
registered under the Securities Act of 1933, as amended (the
"Act"), however, the Shares may be sold or conveyed only pursuant
to Rule 144.
5. Notices. Any notice pursuant to this Agreement by
Seller or Buyer shall be in writing and shall be deemed to have
been duly given if delivered personally with written receipt
acknowledged or mailed by certified mail five days after mailing,
return receipt requested:
If to Seller:
If to Buyer:
Robert Soehngen
Any party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by
notice in accordance herewith to the other party.
6. This Option is conditional and shall not be exercisable
unless and until Boulder Capital Opportunities III, Inc. has
completed the acquisition of Sonic Jet Performance, LLC.
7. All the covenants and provisions of this Agreement by
or for the benefit of Buyer or Seller shall bind and inure to the
benefit of their respective successors and assigns hereunder.
8. Applicable Law. This Agreement shall be deemed to be a
contract made under the laws of the State of Colorado and for all
purposes shall be construed in accordance with the laws of said
State.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed, all as of the day and year first above
written.
Seller: Buyer:
Boulder Capital Opportunities III, Inc.
/s/Robert Soehngen By:/s/Robert Soehngen
Robert Soehngen President
<PAGE> Exhibit 6.3
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of June 17, 1998, among BOULDER CAPITAL OPPORTUNITIES III, INC.,
a corporation organized under the laws of the State of Colorado
(the "Company"), SONIC JET PERFORMANCE, LLC, a limited liability
company organized under the laws of the State of California
("SJP") and the purchasers (the "Purchaser") set forth on the
execution page hereof (the "Execution Pages").
WHEREAS:
A. The Company, SJP and Purchaser are executing and
delivering this Agreement in connection with the reliance by the
Company and the Purchaser upon the exemption from securities
registration afforded by the provisions of Regulation D
("Regulation D"), as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
B. The Company and SJP have executed and entered into that
certain Share Exchange Agreement, dated June 15, 1998 (the "Share
Exchange Agreement"), whereby the Company will acquire
substantially all of the assets and liabilities of SJP in
exchange for common stock of the Company (the "Transaction").
After completion of the Transaction the Company will change its
name to "Sonic JET Performance, Inc."
C. The Company desires to sell, and Purchaser desires to
purchase, upon the terms and conditions stated in this Agreement,
1,600 shares of the Company's Series A Convertible Preferred
Stock, no par value (the "Preferred Shares"), convertible into
shares of the Company's common stock, no par value (the "Common
Stock"). The rights, preferences and privileges of the Preferred
Shares, including the terms upon which such Preferred Shares are
convertible into shares of Common Stock, are set forth in the
form of Certificate of Designations, Preferences and Rights
attached hereto as Exhibit A (the "Certificate of Designation").
The shares of Common Stock issuable upon conversion of the
Preferred Shares or otherwise pursuant to the Certificate of
Designation are referred to herein as the "Conversion Shares".
The Preferred Shares, and the Conversion Shares are collectively
referred to herein as the "Securities" and each of them may
individually be referred to herein as a "Security."
D. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement, in the form attached hereto as
Exhibit B (the "Registration Rights Agreement"), pursuant to
which the Company has agreed to provide certain registration
rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
<PAGE>
NOW, THEREFORE, the Company, SJP and the Purchaser hereby
agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
(a) Purchase of Preferred Shares. On the Closing Date (as
defined below), subject to the satisfaction (or waiver) of the
conditions set forth in Section 7 and Section 8 below, the
Company shall issue and sell to Purchaser, and Purchaser shall
purchase from the Company, the Preferred Shares. The purchase
price (the "Purchase Price") shall be One Million Five Hundred
Thousand Dollars ($1,500,000.00) for the Preferred Shares.
(b) Form of Payment. On the Closing Date, Purchaser shall
pay the aggregate Purchase Price by wire transfer to the Company,
in accordance with the Company's written wiring instructions,
against delivery of duly executed certificates representing the
Preferred Shares being purchased by Purchaser and the Company
shall deliver such certificates against delivery of such
aggregate Purchase Price.
(c) Closing Date. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Section 7 and Section 8
below, the date and time of the issuance and sale of the
Preferred Shares pursuant to this Agreement (the "Closing") shall
be 12:00 noon, New York City time, on June 19, 1998, subject to a
two business day grace period at either party's option, but in
any event not later than June 26, 1998, or such other time as may
be mutually agreed upon by the Company and the Purchaser (the
"Closing Date"). The Closing shall occur at the offices of
Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, 1401 Walnut
Street, Philadelphia, Pennsylvania 19102.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to the Company as follows:
(a) Purchase for Own Account, Etc. Purchaser is purchasing
the Preferred Shares for Purchaser's own account and not with a
present view towards the public sale or distribution thereof,
except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser understands that Purchaser must
bear the economic risk of this investment indefinitely, unless
the Securities are registered pursuant to the Securities Act and
any applicable state securities or blue sky laws or an exemption
from such registration is available, and that the Company has no
present intention of registering the resale of any such
Securities other than as contemplated by the Registration Rights
Agreement. Notwithstanding anything in this Section 2(a) to the
contrary, by making the representations herein, the Purchaser
does not agree to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities
at any time in accordance with or pursuant to a registration
statement or an exemption from the registration requirements
under the Securities Act.
(b) Accredited Investor Status. Purchaser is an
"Accredited Investor" as that term is defined in Rule 501(a) of
Regulation D.
-2-
<PAGE>
(c) Reliance on Exemptions. Purchaser understands that the
Preferred Shares are being offered and sold to Purchaser in
reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of,
and Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such
exemptions and the eligibility of Purchaser to acquire the
Preferred Shares.
(d) Information. Purchaser and its counsel, if any, have
been furnished all materials relating to the business, finances
and operations of the Company and SJP and materials relating to
the offer and sale of the Preferred Shares which have been
specifically requested by Purchaser or its counsel. Purchaser
and its counsel have been afforded the opportunity to ask
questions of the Company and SJP. Neither such inquiries nor any
other investigation conducted by Purchaser or its counsel or any
of its representatives shall modify, amend or affect Purchaser's
right to rely on the Company's or SJP's representations and
warranties contained in Section 3 and Section 4 below. Purchaser
understands that Purchaser's investment in the Preferred Shares
involves a high degree of risk.
(e) Governmental Review. Purchaser understands that no
United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Preferred Shares.
(f) Transfer or Resale. Purchaser understands that (i)
except as provided in the Registration Rights Agreement, the sale
or resale of the Preferred Shares and the Conversion Shares have
not been and are not being registered under the Securities Act or
any state securities laws, and the Preferred Shares and the
Conversion Shares may not be transferred unless (a) the resale of
the Preferred Shares or the Conversion Shares, as applicable, has
been registered thereunder; or (b) Purchaser shall have delivered
to the Company an opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the Preferred Shares
or Conversion Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; or
(c) the Preferred Shares or the Conversion Shares, as applicable,
are sold under Rule 144 promulgated under the Securities Act (or
a successor rule) ("Rule 144"); or (d) the Preferred Shares or
the Conversion Shares, as applicable, are sold or transferred to
an affiliate of Purchaser who agrees to sell or otherwise
transfer the Preferred Shares or the Conversion Shares, as
applicable, only in accordance with the provisions of this
Section 2(f) and who is an Accredited Investor; and (ii) neither
the Company nor any other person is under any obligation to
register such Preferred Shares or the Conversion Shares under the
Securities Act or any state securities laws (other than pursuant
to the Registration Rights Agreement). Notwithstanding the
foregoing or anything else contained herein to the contrary, the
Preferred Shares or the Conversion Shares may be pledged as
collateral in connection with a bona fide margin account or other
lending arrangement.
(g) Legends. Purchaser understands that the certificates
for the Preferred Shares and, until such time as the Conversion
Shares have been registered under the Securities Act (including
-3-
<PAGE>
registration pursuant to Rule 416 thereunder) as contemplated by
the Registration Rights Agreement or otherwise may be sold by
Purchaser under Rule 144, the certificates for the Conversion
Shares may bear a restrictive legend in substantially the
following form:
The securities represented by this certificate have
not been registered under the Securities Act of
1933, as amended, or the securities laws of
any state of the United States. The securities
represented hereby may not be offered, sold or
transferred in the absence of an effective
registration statement for the securities under
applicable securities laws unless offered, sold
or transferred under an available exemption from
the registration requirements of those laws.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon which
it is stamped if, unless otherwise required by state securities laws, (a) the
sale of such Security is registered under the Securities Act (including
registration pursuant to Rule 416 thereunder) as contemplated by the
Registration Rights Agreement; (b) such holder provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or
transfer of such Security may be made without registration under the Securities
Act; or (c) such holder provides the Company with reasonable assurances that
such Security can be sold under Rule 144. Purchaser agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, pursuant to an effective registration statement or
under an exemption from the registration requirements of the Securities Act.
In the event the above legend is removed from any Security and thereafter
the effectiveness of a registration statement covering such Security is
suspended or the Company determines that a supplement or amendment thereto
is required by applicable securities laws, then upon reasonable advance
notice to Purchaser the Company may require that the above legend be placed
on any such Security that cannot then be sold pursuant to an effective
registration statement or under Rule 144 and Purchaser shall cooperate in the
replacement of such legend. Such legend shall thereafter be removed when
such Security may again be sold pursuant to an effective registration
statement or under Rule 144.
(h) Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and
delivered on behalf of Purchaser and are valid and binding agreements of
Purchaser enforceable against Purchaser in accordance with their terms.
(i) Residency. Purchaser is a resident of the jurisdiction set forth
under Purchaser's name on the Execution Page hereto executed by Purchaser.
-4-
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Purchaser as follows:
(a) Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, and has the
requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of
the business conducted by it makes such qualification necessary and where
the failure so to qualify would have a Material Adverse Effect. "Material
Adverse Effect" means any material adverse effect on (i) the Securities,
(ii) the ability of the Company or SJP to perform its obligations hereunder
or under the Certificate of Designation or the Registration Rights Agreement,
(iii) the ability of the Company or SJP to consummate the Transaction or
(iv) the business, operations, properties, prospects or financial condition
of the Company or SJP and their subsidiaries, taken as a respective whole.
(b) Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations
under this Agreement and the Registration Rights Agreement, to issue and sell
the Preferred Shares in accordance with the terms hereof, to issue the
Conversion Shares upon conversion of the Preferred Shares in accordance
with the terms of the Certificate of Designation; (ii) the execution, delivery
and performance of this Agreement and the Registration Rights Agreement by
the Company and the consummation by it of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the
Preferred Shares and the issuance and reservation for issuance of the
Conversion Shares) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, any committee of the Board of Directors or the Company's
shareholders is required, and (iii) this Agreement constitutes, and, upon
execution and delivery by the Company of the Registration Rights Agreement,
such agreements will constitute, valid and binding obligations of
the Company enforceable against the Company in accordance with their terms.
(c) Stockholder Authorization. The Company believes that neither the
execution, delivery or performance of this Agreement or the Registration
Rights Agreement by the Company nor the consummation by it of the
transactions contemplated hereby or thereby (including, without limitation,
the Transaction, the issuance of the Preferred Shares or the issuance,
reservation for issuance or listing of the Conversion Shares) requires any
consent, approval or authorization of the Company's stockholders.
(d) Capitalization. The capitalization of the Company as of the
date hereof and the pro forma capitalization of the Company assuming the
consummation of the Transaction, including the authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable
and reserved for issuance pursuant to the Company's stock option plans, the
number of shares issuable and reserved for issuance pursuant to
securities (other than the Preferred Shares)
-5-
<PAGE>
exercisable or exchangeable for, or convertible into, any shares of
capital stock is set forth on Schedule 3(d). All of such outstanding
shares of capital stock have been, or upon issuance in accordance with the
terms of any such warrants, options or preferred stock, will be, validly
issued, fully paid and non-assessable. No shares of capital stock of the
Company (including the Preferred Shares, the Conversion Shares) are subject
to preemptive rights or any other similar rights of the stockholders of the
Company or any liens or encumbrances. Except for the Securities and as set
forth on Schedule 3(d), as of the date of this Agreement, (i) there are
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements
by which the Company or any of its subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of its
subsidiaries, and (ii) there are no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to register the sale of
any of its or their securities under the Securities Act (except the
Registration Rights Agreement). Except as set forth on Schedule 3(d), (i)
there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities in
accordance with the terms of this Agreement, the Certificate of Designation,
(ii) there are no outstanding securities or instruments of the Company
or any ofits subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements
by which the Company or any of its subsidiaries is or may become bound to
redeem a security of the Company or any of its subsidiaries, and (iii) the
Company does not have any stock appreciation rights or "phantom stock" plans
or agreements or any similar plan or agreement. The Company has furnished to
the Purchaser true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws as in effect on the date hereof
(the "By-laws"), and all other instruments and agreements governing
securities convertible into or exercisable or exchangeable for capital stock
of the Company. The Certificate of Designation, in the form attached
hereto, will be duly filed prior to Closing with the Secretary of State of
the State of Colorado and, upon the issuance of the Preferred Shares
in accordance with the terms hereof, each Purchaser shall be entitled to the
rights set forth therein.
(e) Issuance of Shares. The Preferred Shares are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will be
validly issued, fully paid and non assessable, and free from all taxes,
liens, claims and encumbrances and will not be subject to preemptive rights
or other similar rights of stockholders of the Company and will not impose
personal liability on the holders thereof. The Conversion Shares are duly
authorized and, in accordance with the Certificate of Designation reserved
for issuance, and, upon conversion of the Preferred Shares in accordance with
the terms thereof, will be validly issued, fully paid and non-assessable, and
free from all taxes, liens, claims and encumbrances and will not be subject
to preemptive rights or other similar rights of stockholders of the Company
and will not impose personal liability upon the holder thereof.
(f) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company, the
performance by the Company of its obligations under the Certificate of
Designation, and the consummation by the Company of the transactions
-6-
<PAGE>
contemplated hereby and thereby (including, without limitation, the
Transaction, the issuance and reservation for issuance, as applicable, of the
Preferred Shares and Conversion Shares) will not (i) result in a violation
of the Certificate of Incorporation or By-laws or (ii) conflict with, or
constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any rights of
termination, amendment (including, without limitation, the triggering of
any anti-dilution provisions), acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and rules or regulations of any self-regulatory
organizations to which either the Company or its securities are subject)
applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected (except, with respect to clause (ii), for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and
violations that would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its subsidiaries
is in default (and no event has occurred which, with notice or lapse of
time or both, would put the Company or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or lapse
of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company
or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights that would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company
and its subsidiaries are not being conducted, and shall not be conducted so
long as Purchaser owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either singly or in the aggregate would
not have a Material Adverse Effect. Except as specifically contemplated by
this Agreement and the Registration Rights Agreement, the Company is not
required to obtain any consent, approval, authorization or order of, or make
any filing or registration with, any court or governmental agency or any
regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or the Registration
Rights Agreement or to perform its obligations under the Certificate of
Designation, in each case in accordance with the terms hereof or thereof.
(g) SEC Documents, Financial Statements. Since December 31, 1994,
the Company has timely filed (within applicable extension periods) all
reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (all of
the foregoing and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, being
hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to the Purchaser true and complete copies of the SEC Documents. As
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
-7-
<PAGE>
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings made prior to the date hereof).
As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP"), consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to immaterial year-end audit adjustments). Except
as set forth in the financial statements of the Company included in the SEC
Documents filed prior to the date hereof, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the date of such financial statements, (ii)
liabilities not required by GAAP to be disclosed on a balance sheet prepared in
accordance with GAAP, and (iii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under GAAP to
be reflected in such financial statements, which liabilities and obligations
referred to in clauses (i), (ii) and (iii), individually or in the aggregate,
are not material to the financial condition or operating results of the
Company. Neither the Company nor any of its subsidiaries or any of their
officers, directors, employees or agents have provided the Purchaser with any
material, nonpublic information.
(h) Absence of Certain Changes. Since December 31, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, except as
disclosed in Schedule 3(h) or in the SEC Documents filed prior to the date
hereof.
(i) Absence of Litigation. Except as set forth on Schedule 3(i) and as
expressly disclosed in the SEC Documents filed prior to the date hereof,
there is no action, suit, proceeding, inquiry or investigation before or by
any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, or
any of their respective directors or officers in their capacities as such.
There are no facts which, if known by a potential claimant or governmental
authority, could give rise to a claim or proceeding which, if asserted or
conducted with results unfavorable to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect.
(j) Intellectual Property. Each of the Company and its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
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systems or procedures) and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as
now being conducted and as described in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997. To the best knowledge of
the Company, neither the Company nor any subsidiary of the Company infringes
or is in conflict with any right of any other person with respect to any
Intangibles which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received written
notice of any pending conflict with or infringement upon such third party
Intangibles, which alleged pending conflict or alleged infringement, if
adversely determined, would result in a Material Adverse Effect. Except as
disclosed in the SEC Documents filed prior to the date hereof, the
termination of the Company's ownership of, or right to use, any single
Intangible would not result in a Material Adverse Effect on the Company.
Neither the Company nor any of its subsidiaries has entered into any consent
agreement, indemnification agreement, forbearance to sue or settlement
agreement with respect to the validity of the Company's or its subsidiaries'
ownership or right to use its Intangibles and, to the best knowledge of the
Company, there is no reasonable basis for any such claim to be successful.
The Intangibles are valid and enforceable and no registration relating
thereto has lapsed, expired or been abandoned or canceled or is the subject
of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. The Company and its subsidiaries
have complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the best knowledge of the Company, no person is infringing on or
violating the Intangibles owned or used by the Company or its subsidiaries.
(k) Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
(l) Disclosure. All information relating to or concerning the Company
set forthin this Agreement or provided to the Purchasers pursuant to Section
2(d) hereof or otherwise in connection with the transactions contemplated
hereby is true and correct in all material respects and the Company has
not omitted to state any material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their respective
businesses, properties, prospects, operations or financial conditions, which
has not been publicly disclosed but, under applicable law, rule or
regulation, would be required to be disclosed by the Company in a
registration statement filed on the date hereof by the Company under the
Securities Act with respect to the primary issuance of the Company's securities.
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(m) Acknowledgment Regarding Purchaser's Purchase of the Preferred
Shares. The Company acknowledges and agrees that the Purchaser is not acting
as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and the Purchaser is "arms length" and any
statement made by Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to Purchaser's purchase
of the Preferred Shares and has not been relied upon by the Company, its
officers or its directors in any way. The Company further acknowledges that
the Company's decision to enter into this Agreement has been based solely on
an independent evaluation by the Company and its representatives.
(n) Form SB-2 Eligibility. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form
SB-2 under the Securities Act. There exist no facts or circumstances that
would prohibit or delay the preparation and filing of a registration
statement on Form SB-2 with respect to the Registrable Securities (as
defined in the Registration Rights Agreement).
(o) No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated
hereby (if any) nor any person acting for the Company, or any such
distributor, has conducted any "general solicitation," as such term is
defined in Regulation D, with respect to any of the Securities being offered
hereby.
(p) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers
to buy any security under circumstances that would require registration of
the Securities being offered hereby under the Securities Act or cause this
offering of Securities to be integrated with any prior offering of securities
of the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
(q) No Brokers. Except for a consulting fee payable to CDC Consulting,
Inc. In the amount of 400,000 shares of Common Stock, the Company has taken
no action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by any Purchaser relating to
this Agreement or the transactions contemplated hereby.
(r) Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Preferred Shares may increase in certain
circumstances, including if the trading price of the Common Stock declines.
The Company's executive officers have studied and fully understand the nature
of the Securities being sold hereunder. The Company acknowledges that its
obligation to issue Conversion Shares upon conversion of the Preferred Shares
in accordance with the Certificate of Designation is absolute and
unconditional, regardless of the dilution that such issuance may have on the
ownership interests of other stockholders. Taking the foregoing into account,
the Company's Board of Directors has determined in its good faith business
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judgment that the issuance of the Preferred Shares hereunder and the
consummation of the other transactions contemplated hereby are in the best
interests of the Company and its stockholders.
(s) Title. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and merchantable title to
all personal property owned by them that is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(s) or
such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries. Any real property and facilities held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not materially interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.
(t) Tax Status. Except as set forth on Schedule 3(t), the Company and
each of its subsidiaries has made or filed all foreign, federal, state and
local income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and has
set aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. Except as set forth on Schedule 3(t), there are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no basis for any
such claim. The Company has not executed a waiver with respect to any
statute of limitations relating to the assessment or collection of any
federal, state or local tax. Except as set forth on Schedule 3(t), none of
the Company's tax returns is presently being audited by any taxing authority.
(u) Environmental Laws. The Company and each of its subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.
(v) Regulatory Permits. The Company and each of its subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.
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<PAGE>
(w) No Other Agreements. The Company has not, directly or indirectly,
made any agreements with Purchaser relating to the terms or conditions of the
transactions contemplated by this Agreement, the Certificate of Designation
and the RegistrationRights Agreement except as set forth in such documents.
(x) Eligibility for Sale Under Rule 144. The Company's Common Stock
is eligible for resale under Rule 144 promulgated under the Securities Act of
1933, as amended, without regard to the status of any holder of such Common
Stock as an affiliate of the Company or any applicable holding period
thereunder. Upon consummation of the Transaction, Kapher Trust will not be
an affiliate of the Company. For the purposes of this Section 3(x), the
term "affiliate" shall be defined as set forth in section (a)(1) of Rule 144
promulgated under the Securities Act ("Rule 144").
4. REPRESENTATIONS AND WARRANTIES OF SJP.
SJP represents and warrants to each Purchaser as follows:
(a) Organization and Qualification. SJP and each of its subsidiaries
is a corporation duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated, and has the requisite corporate
power to own its properties and to carry on its business as now being
conducted. SJP and each of its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary and where the failure so to qualify would
have a Material Adverse Effect.
(b) Authorization; Enforcement. (i) SJP has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement; (ii) the execution, delivery and performance of this Agreement by
SJP and the consummation by it of the transactions contemplated hereby
(including, without limitation, the Transaction) have been duly authorized by
SJP's Board of Directors and no further consent or authorization of SJP, its
Board of Directors, any committee of the Board of Directors or SJP's
shareholders is required; and (iii) this Agreement constitutes valid and
binding obligations of SJP enforceable against SJP in accordance with their
terms.
(c) Stockholder Authorization. Neither the execution, delivery
or performance of this Agreement by SJP nor the consummation by it of
the transactions contemplated hereby (including, without limitation,
the Transaction) requires any consent, approval or authorization of SJP's
stockholders.
(d) Capitalization. The capitalization of SJP as of the date
hereof, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for
issuance pursuant to SJP's stock option plans, the number of shares
issuable and reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, any shares of capital stock is
set forth on Schedule 4(d). All of such outstanding shares of capital
stock have been, or upon issuance in accordance with the terms of
any such warrants, options or preferred stock, will be, validly issued,
fully paid and non-assessable. No shares of capital stock of SJP
are subject to preemptive rights or any other similar rights of the
stockholders of SJP or any liens or encumbrances. Except for the Securities
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<PAGE>
and as set forth on Schedule 4(d), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of SJP or any of
its subsidiaries, or arrangements by which SJP or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of
SJP or any of its subsidiaries, and (ii) there are no agreements or
arrangements under which SJP or any of its subsidiaries is obligated
to register the sale of any of its or their securities under the
Securities Act. Except as set forth on Schedule 4(d), (i)there are no
securities or instruments containing anti-dilution or similar provisions
that will be triggered by the execution of this Agreement, (ii) there
are no outstanding securities or instruments of SJP or any of its
subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements
by which SJP or any of its subsidiaries is or may become bound to redeem a
security of SJP or any of its subsidiaries, and (iii) SJP does not have
any stock appreciation rights or "phantom stock" plans or agreements or
any similar plan or agreement. SJP has furnished to the Purchaser
true and correct copies of SJP's Certificate of Incorporation as in
effect on the date hereof ("Certificate of Incorporation"), SJP's
By-laws as in effect on the date hereof (the "By-laws"), and all other
instruments and agreements governing securities convertible into or
exercisable or exchangeable for capital stock of SJP.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by SJP and the consummation by SJP of the transactions
contemplated hereby and thereby (including, without limitation, the
Transaction) will not (i) result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
become a default) under, or give to others any rights of termination,
amendment (including, without limitation, the triggering of any
anti-dilution provisions), acceleration or cancellation of, any
agreement, indenture or instrument to which SJP or any of its subsidiaries
is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and rules or regulations of any self- regulatory organizations
to which either SJP or its securities are subject) applicable to SJP or any
of its subsidiaries or by which any property or asset of SJP or any of
its subsidiaries is bound or affected (except, with respect to clause
(ii), for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not, individually
or in the aggregate, have a Material Adverse Effect). Neither SJP nor any
of its subsidiaries is in violation of its Certificate of Incorporation,
By-laws or other organizational documents and neither SJP nor any of its
subsidiaries is in default (and no event has occurred which, with notice
or lapse of time or both, would put SJP or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
SJP or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights that would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of SJP and its
subsidiaries are not being conducted, and shall not be conducted so
long as Purchaser owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either singly or in the aggregate
would not have a Material Adverse Effect. Except as specifically
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<PAGE>
contemplated by this Agreement and the Registration Rights Agreement,
SJP is not required to obtain any consent, approval, authorization or order
of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to
execute, deliver or perform any of its obligations under this Agreement
or the Registration Rights Agreement in accordance with the terms hereof
or thereof.
(f) Absence of Certain Changes. Since December 31, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, prospects, financial condition or results
of operations of SJP and its subsidiaries, taken as a whole, except as
disclosed in Schedule 4(f) or in the Disclosure Materials (as defined below).
(g) Absence of Litigation. Except as set forth on Schedule 4(g) and
as expressly disclosed in the Disclosure Materials (as defined below) filed
prior to the date hereof, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of SJP
or any of its subsidiaries, threatened against or affecting SJP, any of its
subsidiaries, or any of their respective directors or officers in
their capacities as such. There are no facts which, if known by a potential
claimant or governmental authority, could give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable
to SJP or any of its subsidiaries, could reasonably be expected to have
a Material Adverse Effect.
(h) Intellectual Property. Each of SJP and its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as
now being conducted and as described in the Disclosure Materials (as
defined below). To the best knowledge of SJP, neither SJP nor any
subsidiary of SJP infringes or is in conflict with any right of any other
person with respect to any Intangibles which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. Neither SJP nor any of its
subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles, which alleged pending
conflict or alleged infringement, if adversely determined, would result
in a Material Adverse Effect. Except as disclosed in the Disclosure
Materials (as defined below), the termination of SJP's ownership of, or
right to use, any single Intangible would not result in a Material Adverse
Effect on SJP. Neither SJP nor any of its subsidiaries has entered into
any consent agreement, indemnification agreement, forbearance to sue or
settlement agreement with respect to the validity of SJP's or its
subsidiaries' ownership or right to use its Intangibles and, to the best
knowledge of SJP, there is no reasonable basis for any such claim to be
successful. The Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is
the subject of cancellation or other adversarial proceedings, and all
applications therefor are pending and in good standing. SJP and its
subsidiaries have complied, in all material respects, with their respective
contractual obligations relating to the protection of the Intangibles
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<PAGE>
used pursuant to licenses. To the best knowledge of SJP, no person
is infringing on or violating the Intangibles owned or used by SJP or its
subsidiaries.
(i) Foreign Corrupt Practices. Neither SJP, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of SJP or any subsidiary has, in the course of his
actions for, or on behalf of, SJP, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(j) Disclosure. All information relating to or concerning SJP set
forth in this Agreement or provided to the Purchasers pursuant to Section
2(d) hereof or otherwise in connection with the transactions contemplated
hereby is true and correct in all material respects and SJP has not omitted to
state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or exists
with respect to SJP or its subsidiaries or their respective businesses,
properties, prospects, operations or financial conditions, which has not
been publicly disclosed but, under applicable law, rule or regulation,
would be required to be disclosed by SJP in a registration statement filed
on the date hereof by SJP under the Securities Act with respect to the
primary issuance of SJP's securities.
(k) Acknowledgment Regarding Purchaser's Purchase of the Preferred
Shares. SJP acknowledges and agrees that the Purchaser is not acting as a
financial advisor or fiduciary of SJP (or in any similar capacity) with
respect to this Agreement or the transactions contemplated hereby, the
relationship between SJP and the Purchaser is "arms-length" and any
statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to Purchaser's
purchase of the Preferred Shares and has not been relied upon by SJP, its
officers or its directors in any way. SJP further acknowledges that SJP's
decision to enter into this Agreement has been based solely on an
independent evaluation by SJP and its representatives.
(l) No Brokers. Except for a consulting fee payable to CDC Consulting,
Inc. In the amount of 400,000 shares of Common Stock, SJP has taken no
action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by any Purchaser
relating to this Agreement or the transactions contemplated hereby.
(m) Title. SJP and its subsidiaries have good and marketable
title in fee simple to all real property and good and merchantable title to
all personal property owned by them that is material to the business of SJP
and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 4(m)
or such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by SJP and its subsidiaries. Any real property and facilities held
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<PAGE>
under lease by SJP and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not materially interfere with the use made and proposed to be made
of such property and buildings by SJP and its subsidiaries.
(n) Tax Status. Except as set forth on Schedule 4(n), SJP and each
of its subsidiaries has made or filed all foreign, federal, state and
local income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent
that SJP and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. Except as set forth on Schedule 4(n), there
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of SJP know of no basis
for any such claim. SJP has not executed a waiver with respect to any
statute of limitations relating to the assessment or collection of any
federal, state or local tax. Except as set forth on Schedule 4(n), none of
SJP's tax returns is presently being audited by any taxing authority.
(o) Environmental Laws. SJP and each of its subsidiaries (i) are
in compliance with any and all Environmental Laws, (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license or
approval.
(p) Regulatory Permits. SJP and each of its subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither SJP nor any such subsidiary has received
any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(q) No Other Agreements. SJP has not, directly or indirectly,
made any agreements with Purchaser relating to the terms or conditions of the
transactions contemplated by this Agreement, the Certificate of
Designation and the Registration Rights Agreement except as set forth in
such documents.
(r) Disclosure Materials. The financial statements of SJP dated
December 31, 1997 and any other financial statements delivered by SJP
to the Purchasers (the "Financial Statements" and, together with the
Schedules to this Agreement and other documents and information furnished
by or on behalf of SJP at any time prior to the Closing, the "Disclosure
Materials") comply in all material respects with applicable accounting
requirements. Such Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved, except as may be otherwise specified in such
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<PAGE>
Financial Statements or the notes thereto, and fairly present in all material
respects the financial position of SJP as of and for the dates thereof and
the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal year-end audit
adjustments. There are not liabilities, contingent or otherwise, of SJP
involving material amounts not disclosed in said Financial Statements.
The Disclosure Materials do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since
December 31, 1997 there has been no event, occurrence or development that
has had or that could have or result in a Material Adverse Effect.
5. COVENANTS.
(a) Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 7 and Section 8 of this
Agreement.
(b) Form D: Blue Sky Laws. The Company shall file with the SEC a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Securities for sale
to the Purchaser pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States or obtain exemption
therefrom, and shall provide evidence of any such action so taken to the
Purchasers on or prior to the Closing Date.
(c) Reporting Status. So long as any Purchaser beneficially
owns any of the Securities, the Company shall timely file all reports
required to be filed with the SEC pursuant to the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination. In addition, the Company shall
take all actions necessary to continue to be eligible to register the
resale of its Common Stock on a registration statement on Form SB2 under the
Securities Act.
(d) Use of Proceeds. The Company shall use the proceeds from the
sale of the Preferred Shares as set forth in Schedule 5(d).
(e) Expenses. Except as otherwise provided herein and in Section 5 of
the Registration Rights Agreement, each party hereto shall be responsible for
its own expenses incurred in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith.
(f) Financial Information. The Company shall send the following
reports to Purchaser until Purchaser transfers, assigns or sells all of
its Securities: (i) within 10 days after the filing with the SEC, a copy
of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB,
its proxy statements and any Current Reports on Form 8-K; (ii) within
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one day after release, copies of all press releases issued by the Company
or any of its subsidiaries; and (iii) copies of any notices and other
information made available or given to shareholders of the Company generally,
contemporaneously with making available or giving thereof to such
shareholders.
(g) Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the full conversion of the
outstanding Preferred Shares and issuance of the Conversion Shares in
connection therewith, subject to and as otherwise required by the
Certificate of Designation, as applicable.
(h) Listing. The Company shall promptly secure the listing of the
Conversion Shares upon the American Stock Exchange ("AMEX"), the New York
Stock Exchange ("NYSE"), the Nasdaq National Market ("NNM"), the Nasdaq
SmallCap Market ("SmallCap") or in the over-the-counter market on the
electronic bulletin board (the "Bulletin Board") and will comply in all
respects with the reporting, filing and other obligations under the
Listing Standards, Policies and Requirements of the AMEX and the bylaws or
rules of the NYSE and the National Association of Securities Dealers, Inc.,
as applicable and shall maintain, so long as Purchaser (or any of their
affiliates) own any Securities, such listing of all Conversion Shares from
time to time issuable upon conversion of the Preferred Shares, as applicable.
The Company shall promptly provide to each holder of Preferred Shares copies
of any notices it receives regarding the continued eligibility of the
Common Stock for trading on any securities exchange or automated quotation
system on which securities of the same class or series issued by the Company
are then listed or quoted, if any.
(i) Corporate Existence. So long as a Purchaser beneficially
owns any Securities, the Company shall maintain its corporate existence, and
in the event of a merger, consolidation or sale of all or substantially all
of the Company's assets, the Company shall ensure that the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the Certificate of Designation (except as otherwise
provided therein) and the agreements and instruments entered into in
connection herewith regardless of whether or not the Company would have had a
sufficient number of shares of Common Stock authorized and available for
issuance in order to effect the conversion of all Preferred Shares
outstanding as of the date of such transaction and (ii) is a publicly traded
corporation whose common stock is listed for trading on the AMEX, NYSE,
NNM, SmallCap or the Bulletin Board. Notwithstanding the foregoing, the
Company covenants and agrees that it will not engage in any merger,
consolidation or sale of all or substantially all of its assets at any time
prior to the effectiveness of the registration statement required to be
filed pursuant to the Registration Rights Agreement without (A) providing
Purchaser with written notice of such transaction at least 60 days
prior to the consummation of such transaction, (B) obtaining the
written consent of the Purchaser on or before the 10th day after the
delivery of such notice by the Company, and (C) publicly announcing
such transaction.
(j) No Integrated Offerings. The Company shall not make any offers
or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold
hereunder under the Securities Act or cause the offering of the Securities
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to be integrated with any other offering of securities by the Company for
purposes of any stockholder approval provision applicable to the Company
or its securities.
(k) Legal Compliance. The Company shall conduct its business and
the business of its subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except
where the failure to do so would not have a Material Adverse Effect.
(l) Filing of Form 8-K. On or before the first (1st) business day
following the Closing Date, the Company shall file a Current Report on Form
8-K with the SEC describing the terms of the transactions contemplated by
this Agreement, the Certificate of Designation and the Registration Rights
Agreement in the form required by the Exchange Act.
(m) Capital and Surplus; Special Reserves. The amount to be
represented in the capital account for the Series A Preferred Stock at all
times for each outstanding share of Series A Preferred Stock shall be
an amount equal to the Redemption Amount therefor.
(n) Additional Equity Capital; Right of First Offer. The Company and
SJP agree that during the period beginning on the date hereof and ending
on the date which is 180 days following the Closing Date (the "Lock-Up
Period"), the Company will not obtain additional financing in which any
equity or equity- linked securities are issued (including any debt
financing with an equity component) ("Future Offerings") without first
obtaining the written consent of the Purchaser. In addition, during the
period beginning on the date hereof and ending 180 days following the
expiration of the Lock-Up Period, the Company will not conduct a future
offering unless it shall have first delivered to Purchaser, at least ten
(10) business days prior to the closing of such Future Offering, written
notice describing the proposed Future Offering, including the terms and
conditions thereof, and providing Purchaser and its affiliates an option
during the ten (10) business day period following delivery of such
notice to purchase all of the securities being offered in the Future
Offering on the same terms as contemplated by such Future Offering
(the limitation referred to in this Section 5(n) is referred to as the
"Capital Raising Limitation"). The Capital Raising Limitation shall not apply
to any transaction involving issuances of securities as consideration in
a merger, consolidation or acquisition of assets, or in connection with any
strategic partnership or joint venture (the primary purpose of which is
not to raise equity capital), or as consideration for the acquisition of a
business, product or license by the Company. The Capital Raising Limitation
also shall not apply to (i) the issuance of securities pursuant to an
underwritten public offering, (ii) the issuance of securities upon
exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof or (iii) the grant
of additional options or warrants, or the issuance of additional securities,
under any duly authorized Company stock option or restricted stock plan for
the benefit of the Company's employees or directors.
(o) The Company shall have filed, within ten (10) days of the Closing
hereunder, a complete application on Form 211 with the National Association
of Securities Dealers seeking approval for the quotation of the Company's
Common Stock in the over
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the counter market on the Electronic Bulletin Board by the National
Association of Securities Dealers, Inc.
6. TRANSFER AGENT INSTRUCTIONS.
(a) The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee,
for the Conversion Shares in such amounts as specified from time to time by
such Purchaser to the Company upon conversion of the Preferred Shares, as
applicable.
(b) The Company warrants that no instruction other than such
instructions referred to in this Section 6, and stop transfer instructions
to give effect to Section 2(f) hereof in the case of the transfer of the
Conversion Shares prior to registration of the Conversion Shares under the
Securities Act or without an exemption therefrom, will be given by the
Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way each Purchaser's
obligations and agreement set forth in Section 2(g) hereof to resell the
Securities pursuant to an effective registration statement or under an
exemption from the registration requirements of applicable securities law.
(c) If a Purchaser provides the Company and the transfer agent with
an opinion of counsel, which opinion of counsel shall be in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that the Preferred Shares to be sold or transferred may be sold
or transferred pursuant to an exemption from registration, or a
Purchaser provides the Company with reasonable assurances that such
Preferred Shares may be sold under Rule 144, the Company shall permit the
transfer and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by Purchaser.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Preferred Shares to Purchaser at the Closing is subject to the satisfaction,
at or before the Closing, of each of the following conditions, provided that
such conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing prior written
notice to each Purchaser.
(a) The Purchaser shall have executed this Agreement and the
Registration Rights Agreement, and delivered executed copies to the Company.
(b) The Purchaser shall have delivered the Purchase Price for the
Preferred Shares in accordance with Section 1(b) above.
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<PAGE>
(c) The representations and warranties of the Purchaser shall be
true and correct as of the date when made and as of the date and time of such
closing as though made at that time (except for representations and
warranties that relate to a different date, which shall be true and
correct as of such date), and the Purchaser shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing Date.
(d) No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby that prohibits the consummation of any of the
transactions contemplated by this Agreement.
8. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of Purchaser hereunder to purchase the Preferred
Shares to be purchased by it at the Closing and the payment of the Purchase
Price is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that such conditions are for
Purchaser's sole benefit and may be waived by Purchaser at any time in
such Purchaser's sole discretion:
(a) The Company and SJP shall have executed this Agreement and the
Company shall have executed the Registration Rights Agreement, and
each shall have delivered executed copies to Purchaser.
(b) The Certificate of Designation shall have been accepted for filing
with the Secretary of State of the State of Colorado and a copy thereof
certified by the Secretary of State of the State of Colorado shall have
been delivered to Purchaser.
(c) The Company shall have delivered to Purchaser duly executed
certificates (each in such denominations as Purchaser shall request)
representing the Preferred Shares being so purchased by Purchaser in
accordance with Section 1(b) above.
(d) The Common Stock shall be authorized for quotation and listed on
the AMEX, the NYSE, the NNM, the SmallCap or the Bulletin Board and
trading in the Common Stock (or the AMEX, the NYSE, the NNM, the SmallCap
generally or the Bulletin Board) shall not have been suspended by the SEC, the
AMEX, the NYSE, the NNM, the SmallCap or the Bulletin Board, as applicable,
and the Conversion Shares shall be listed on the AMEX, the NYSE, the NNM,
the SmallCap or the Bulletin Board, as applicable.
(e) The representations and warranties of the Company and SJP shall be
true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties
that relate to a different date, which shall be true and correct as of such
date) and the Company and SJP shall have performed, satisfied and complied
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with the covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Company or SJP, as
applicable at or prior to the Closing Date. Such Purchaser shall have
received certificates, executed by the Chief Executive Officer of the
Company and of SJP, dated as of the Closing Date to the foregoing effect
and as to such other matters as Purchaser may reasonably request.
(f) No litigation, statute, rule, regulation, executive order,
decree, ruling, injunction, action or proceeding shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction or any self regulatory organization
having authority over the matters contemplated hereby that questions the
validity of, or challenges or prohibits the consummation of, any of the
transactions contemplated by this Agreement.
(g) Purchaser shall have received an opinions of the Company's dated
as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Purchaser and in substantially the form of Exhibit C
attached hereto. Purchaser shall be entitled to receive, and rely upon, an
opinion of SJP's counsel, dated as of the closing of the Transaction, in
form, scope and substance reasonably satisfactory to the Purchaser in
connection with the consummation of the Transaction.
(h) The Company shall have delivered evidence reasonably
satisfactory to the Purchaser that the Company's transfer agent has agreed to
act in accordance with irrevocable instructions in the form attached hereto
as Exhibit D.
(i) There shall have been no material adverse changes and no material
adverse developments in the business, properties, operations, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or SJP and its subsidiaries, taken as a
whole, since the date hereof, and no information, of which the
Purchasers are not currently aware, shall come to the attention of the
Purchaser that is materially adverse to the Company or SJP.
(j) The Board of Directors of the Company and the Board of Directors
of SJP shall have adopted resolutions consistent with Section 3(b) (ii) and
Section 4(b)(ii) above, respectively, and in a form reasonably acceptable to
such Purchaser.
(k) The Company and SJP shall have delivered to Purchaser
certificates evidencing the incorporation and good standing of the Company
and each of its subsidiaries and of SJP and each of its subsidiaries in such
corporation's state of incorporation issued by the Secretary of State of
such state of incorporation as of a date within ten days of the Closing Date.
(l) The Company and SJP shall have delivered to Purchaser certified
copies of their respective Articles of Incorporation as certified by the
Secretary of State of their respective states of incorporation within
ten days of the Closing Date.
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<PAGE>
(m) The Company and SJP shall have delivered to Purchaser secretary's
certificates, dated as of the Closing Date, as to (i) the resolutions
described in Section 7(j), (ii) their respective Certificates of
Incorporation and (iii) their respective Bylaws, each as in effect at
the Closing.
(n) SJP shall have obtained and delivered to Purchaser written
evidence of the consent of each member of SJP to the Transaction, and the
Transaction shall have been consummated in accordance with the Share
Exchange Agreement. The Purchaser and its counsel shall have the right to
review and approve, in their sole and absolute discretion, all documentation
and matters related thereto. SJP and the Company shall have delivered to the
Purchaser copies of an executed Bill of Sale and an executed Assumption
Agreement, or similar documents evidencing the consummation of the
Transaction.
(o) All of the "CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE"
set forth in Section 8 that certain Securities Purchase Agreement, dated as
of June 17, 1998, among the Purchaser and Kapher Trust shall have been
satisfied.
(p) The Company shall have cancelled or retired to treasury at least
400,000 shares of Common Stock as set forth on Schedule 3(d) hereto.
9. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado
applicable to contracts made and to be performed in the State of Colorado.
The Company and SJP irrevocably consent to the jurisdiction of the
United States federal courts and the state courts located in the State of
Colorado in any suit or proceeding based on or arising under this Agreement
and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in such courts. The Company and SJP
irrevocably waive the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company and SJP further agree that service of
process mailed by first class mail shall be deemed in every respect
effective service of process in any such suit or proceeding. Nothing
herein shall affect the right of Purchaser to serve process in any other
manner permitted by law. The Company and SJP agree that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party,
may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
(c) Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of,
this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in
any other jurisdiction.
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<PAGE>
(e) Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the Purchasers, the
Company, SJP, their affiliates and persons acting on their behalf with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company, SJP nor
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived other
than by an instrument in writing signed by the party to be charged with
enforcement and no provision of this Agreement may be amended other than by an
instrument in writing signed by the Company, SJP and Purchaser.
(f) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier or by
confirmed facsimile, and shall be effective upon receipt or refusal of
receipt, if delivered personally or by courier or confirmed facsimile, in
each case addressed to a party. The addresses for such communications
shall be:
If to the Company:
BOULDER CAPITAL OPPORTUNITIES III, INC.
2434 Vine Place
4750 Table Mesa Drive
Boulder, CO 80304
Facsimile:
Attn: Robert Soehngen
with a copy simultaneously transmitted by like means to:
Michael A. Littman, Esquire
10200 W. 44th Avenue, #400
Wheat Ridge, CO 80033
Facsimile: (303) 422-7796
If to SJP:
SONIC JET PERFORMANCE, LLC
15662 Commerce Lane
Huntington Beach, CA 92649
Facsimile:
Attn: Albert Mardikian
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<PAGE>
with a copy simultaneously transmitted by like means to:
Law Offices of Pasquale P. Caiazza
1625 West 22nd Street
Santa Ana, CA 92706-2413
Facsimile:(714) 543-2971
Attn: Christopher A. Morgan, J.D.
If to Purchaser, to such address set forth under Purchaser's name on the
Execution Page hereto executed by Purchaser.
Each party shall provide notice to the other parties of any change in
address.
(g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns,
including, but not limited to, the corporation which is the surviving
entity in the Transaction. Except as provided herein or therein, neither
the Company, SJP nor any Purchaser shall assign this Agreement or the
Registration Rights Agreement or any rights or obligations hereunder
or thereunder. Notwithstanding the foregoing, Purchaser may assign its rights
hereunder to any of its "affiliates" (as that term is defined under the
Exchange Act) who are Accredited Investors without the consent of the
Company (provided such assignees agree to be bound by all of the terms and
conditions hereof), or to any other person or entity with the consent of the
Company, which consent shall not be unreasonably withheld. This provision
shall not limit Purchaser's right to transfer the Securities pursuant to the
terms of the Certificate of Designation and this Agreement or to assign such
Purchaser's rights hereunder or thereunder to any such transferee.
(h) Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(i) Survival. The representations, warranties, agreements and covenants
of the Company and SJP set forth in Sections 3, 4, 5, 6 and 9 hereof shall
survive the Closing notwithstanding any investigation conducted by or on
behalf of Purchaser. None of the representations and warranties made by the
Company or SJP, as applicable, herein shall act as a waiver of any
rights or remedies Purchaser may have under applicable federal or state
securities laws. The Company and/or SJP, as applicable, shall indemnify and
hold harmless Purchaser and each Purchaser's officers, directors,
employees, partners, members, agents and affiliates for all losses or damages
arising as a result of or related to any breach or alleged breach by
the Company and/or SJP, as applicable, of any of its representations or
covenants set forth herein, including advancement of reasonable expenses as
they are incurred.
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<PAGE>
(j) Publicity. The Company and each Purchaser shall have the right
to review before issuance any press releases, SEC filings, filings
with the AMEX, NYSE, the NNM, the SmallCap or the Bulletin Board, as
applicable, or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior review of the Purchasers, to make any press release, SEC
filings or filings with the AMEX, NYSE, the NNM, the SmallCap or the
Bulletin Board, as applicable, with respect to such transactions as is
required by applicable law and regulations (although the Purchaser shall
be consulted by the Company in connection with any such press release and
filing prior to its release and shall be provided with a copy thereof).
(k) Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(l) Termination. In the event that the Closing shall not have
occurred on or before June __, 1998, unless the parties agree otherwise,
this Agreement shall terminate at the close of business on such date.
Notwithstanding any termination of this Agreement, any party not in
breach of this Agreement shall preserve all rights and remedies it may
have against another party hereto for a breach of this Agreement prior to
or relating to the termination hereof.
(m) Joint Participation in Drafting. Each party to this Agreement
has participated in the negotiation and drafting of this Agreement, the
Certificate of Designation and the Registration Rights Agreement. As
such, the language used herein and therein shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any party to
this Agreement.
(n) Equitable Relief. The Company and SJP, respectively,
acknowledge that a breach by it of its obligations hereunder will cause
irreparable harm to Purchaser by vitiating the intent and purpose of
the transactions contemplated hereby. Accordingly, the Company and SJP,
respectively, acknowledge that the remedy at law for a breach of its obligations
hereunder (including, but not limited to, its obligations pursuant to Section
6 hereof) will be inadequate and agree, in the event of a breach or
threatened breach by the Company or by SJP of the provisions of this
Agreement (including, but not limited to, its obligations pursuant to
Section 5 hereof), that Purchaser shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer of the Securities, without the
necessity of showing economic loss and without any bond or other
security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
BOULDER CAPITAL OPPORTUNITIES, INC.
By:/s/Robert Soehngen
Name: Robert Soehngen
Title: President
SONIC JET PERFORMANCE, LLC.
By:
Name:
Title:
PURCHASER:
JNC STRATEGIC FUND LTD.
By:
Name:
Title:
RESIDENCE: Cayman Islands
ADDRESS: c/o Olympia Capital (Cayman) Ltd.
Williams House
20 Reid Street
Hamilton HM11
Bermuda
Telecopy: (441) 295-2305
Attention: Thomas Davis
with copies of all notices to:
Encore Capital
Management, L.L.C.
12007 Sunrise Valley Drive
Suite 460
Reston, VA 20191
Telecopy: (703) 476-7711)
Attn: Neil T. Chau
